Practice Post UTME LEAD CITY UNIVERSITY economics 2025 Past Questions

Question 1

A firm's production function is given by Q = 2L^0.5H^0.5, where Q is output, L is labor, and H is capital. If the firm increases labor from 4 to 9 units, while keeping capital cons\tant at 16 units, what is the percentage change in output?

A. 25%

Correct B. 50%

C. 75%

D. 100%

Correct Answer: B

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Question 2

A government budget is given by B = T + I, where B is the budget deficit, T is tax revenue, and I is government sp\ending. If tax revenue increases by 10% and government sp\ending remains cons\tant at ₦100 billion, what is the new budget deficit?

A. ₦110 billion

Correct B. ₦120 billion

C. ₦130 billion

D. ₦140 billion

Correct Answer: B

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Question 3

A firm's \cost function is given by C = 2L + 3H, where C is \cost, L is labor, and H is capital. If the firm increases labor from 4 to 9 units, while keeping capital cons\tant at 16 units, what is the new \cost?

A. ₦20

Correct B. ₦40

C. ₦60

D. ₦80

Correct Answer: B

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Question 4

A government's tax revenue is given by T = 0.2Y, where T is tax revenue and Y is GDP. If GDP increases by 10%, what is the new tax revenue?

A. ₦20 billion

Correct B. ₦22 billion

C. ₦24 billion

D. ₦26 billion

Correct Answer: B

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Question 5

A firm's revenue function is given by R = 2Q, where R is revenue and Q is output. If the firm increases output from 4 to 9 units, what is the new revenue?

A. ₦20

Correct B. ₦40

C. ₦60

D. ₦80

Correct Answer: B

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Question 6

The government of Nigeria has implemented a policy to increase the production of rice in the country. The policy includes providing subsidies to farmers, investing in irrigation infrastructure, and promoting the use of high-yielding rice varieties. However, the policy has been criticized for its potential impact on the environment and the displacement of small-scale farmers. What is the opportunity \cost of implementing this policy?

A. The opportunity \cost is the increase in rice production, which may lead to a decrease in the production of other crops.

Correct B. The opportunity \cost is the environmental degradation and displacement of small-scale farmers, which may lead to social and economic \costs.

C. The opportunity \cost is the increase in the price of rice, which may lead to a decrease in the demand for rice.

D. The opportunity \cost is the decrease in the production of other crops, which may lead to a decrease in the income of farmers.

Correct Answer: B

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Question 7

A firm is considering two different production processes to produce a certain product. Process A requires an initial investment of ₦10 million and has a variable \cost of ₦5 per unit. Process B requires an initial investment of ₦15 million and has a variable \cost of ₦3 per unit. If the firm produces 10,000 units of the product, what is the total \cost of production for each process?

Correct A. Process A: ₦50 million, Process B: ₦45 million

B. Process A: ₦55 million, Process B: ₦50 million

C. Process A: ₦60 million, Process B: ₦55 million

D. Process A: ₦65 million, Process B: ₦60 million

Correct Answer: A

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Question 8

The government of Nigeria has implemented a policy to increase the production of electricity in the country. The policy includes investing in new power plants, improving the transmission and distribution infrastructure, and promoting the use of renewable energy sources. However, the policy has been criticized for its potential impact on the environment and the displacement of local communities. What is the opportunity \cost of implementing this policy?

A. The opportunity \cost is the increase in electricity production, which may lead to a decrease in the production of other energy sources.

Correct B. The opportunity \cost is the environmental degradation and displacement of local communities, which may lead to social and economic \costs.

C. The opportunity \cost is the increase in the price of electricity, which may lead to a decrease in the demand for electricity.

D. The opportunity \cost is the decrease in the production of other energy sources, which may lead to a decrease in the income of energy producers.

Correct Answer: B

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Question 9

A firm is considering two different production processes to produce a certain product. Process A requires an initial investment of ₦20 million and has a variable \cost of ₦10 per unit. Process B requires an initial investment of ₦25 million and has a variable \cost of ₦8 per unit. If the firm produces 15,000 units of the product, what is the total \cost of production for each process?

Correct A. Process A: ₦250 million, Process B: ₦230 million

B. Process A: ₦280 million, Process B: ₦250 million

C. Process A: ₦310 million, Process B: ₦270 million

D. Process A: ₦340 million, Process B: ₦290 million

Correct Answer: A

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Question 10

The government of Nigeria has implemented a policy to increase the production of maize in the country. The policy includes providing subsidies to farmers, investing in irrigation infrastructure, and promoting the use of high-yielding maize varieties. However, the policy has been criticized for its potential impact on the environment and the displacement of small-scale farmers. What is the opportunity \cost of implementing this policy?

A. The opportunity \cost is the increase in maize production, which may lead to a decrease in the production of other crops.

Correct B. The opportunity \cost is the environmental degradation and displacement of small-scale farmers, which may lead to social and economic \costs.

C. The opportunity \cost is the increase in the price of maize, which may lead to a decrease in the demand for maize.

D. The opportunity \cost is the decrease in the production of other crops, which may lead to a decrease in the income of farmers.

Correct Answer: B

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Question 11

A firm's \cost function is given by C(q) = 2q^2 + 10q + 5. If the firm produces 20 units, what is the total \cost?

A. ₦150

B. ₦200

Correct C. ₦250

D. ₦300

Correct Answer: C

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Question 12

A country's GDP is ₦100 billion, and its GNP is ₦120 billion. What is the net factor income from abroad?

A. ₦20 billion

Correct B. ₦30 billion

C. ₦40 billion

D. ₦50 billion

Correct Answer: B

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Question 13

A firm's revenue function is given by R(q) = 50q - 0.5q^2. If the firm produces 10 units, what is the marginal revenue?

A. ₦40

Correct B. ₦50

C. ₦60

D. ₦70

Correct Answer: B

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Question 14

A country's inflation rate is 5% per annum. If the current price level is ₦100, what will be the price level after 2 years?

A. ₦110

B. ₦120

Correct C. ₦130

D. ₦140

Correct Answer: C

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Question 15

A firm operates in a perfectly competitive market. If the market price is ₦50, and the firm's marginal \cost is ₦40, what will be the firm's profit?

A. ₦10

B. ₦20

Correct C. ₦30

D. ₦40

Correct Answer: C

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Question 16

A firm operating in a perfectly competitive market is characterized by which of the following?

A. Monopolistic competition

B. Oligopoly

Correct C. Perfect competition

D. Monopoly

Correct Answer: C

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Question 17

The production function for a firm is given by Q = 2L^0.5K^0.5. If the firm increases its labor input from 4 units to 9 units, and holds capital input cons\tant at 16 units, what is the percentage change in output?

A. 10%

Correct B. 20%

C. 30%

D. 40%

Correct Answer: B

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Question 18

A country's balance of payments is in equilibrium when its current account is equal to its capital account. If the country's current account is in deficit by $100 million, and its capital account is in surplus by $200 million, what is the overall balance of payments position?

A. Surplus of $100 million

B. Deficit of $100 million

Correct C. Surplus of $300 million

D. Deficit of $300 million

Correct Answer: C

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Question 19

A government imposes a tax on a firm's output, which causes the firm's supply curve to shift to the left. What is the effect on the firm's profit-maximizing output and price?

A. Output increases, price decreases

Correct B. Output decreases, price increases

C. Output increases, price increases

D. Output decreases, price decreases

Correct Answer: B

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Question 20

A firm's demand curve is given by Q = 100 - 2P. If the firm's marginal revenue is $50, what is the price at which the firm will produce 50 units?

A. $25

Correct B. $30

C. $35

D. $40

Correct Answer: B

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Question 21

The government of Nigeria has introduced a new tax policy aimed at increa\sing revenue from the agricultural sector. The policy requires farmers to pay a 10% tax on their annual income. If a farmer's annual income is ₦500,000, what is the amount of tax the farmer must pay?

Correct A. ₦50,000

B. ₦60,000

C. ₦70,000

D. ₦80,000

Correct Answer: A

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Question 22

A monopolistic firm in Nigeria faces a demand curve given by Q = 100 - 2P. The firm's marginal \cost curve is MC = 10 + 2Q. What is the profit-maximizing price and quantity for the firm?

Correct A. P = ₦40, Q = 30

B. P = ₦50, Q = 25

C. P = ₦60, Q = 20

D. P = ₦70, Q = 15

Correct Answer: A

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Question 23

The Nigerian government has introduced a new policy to promote industrialization in the country. The policy aims to increase the production of textiles by 20% within the next two years. If the current production level is 10 million units per year, what is the expected production level after two years?

A. 12 million units

B. 13 million units

Correct C. 14 million units

D. 15 million units

Correct Answer: C

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Question 24

A firm in Nigeria faces a demand curve given by Q = 100 - 2P. The firm's marginal \cost curve is MC = 10 + 2Q. What is the profit-maximizing price and quantity for the firm?

Correct A. P = ₦40, Q = 30

B. P = ₦50, Q = 25

C. P = ₦60, Q = 20

D. P = ₦70, Q = 15

Correct Answer: A

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Question 25

The Nigerian government has introduced a new policy to promote agriculture in the country. The policy aims to increase the production of rice by 15% within the next year. If the current production level is 5 million tons per year, what is the expected production level after one year?

A. 5.75 million tons

B. 6 million tons

Correct C. 6.25 million tons

D. 6.5 million tons

Correct Answer: C

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